Both Embryonic Stem (ES) cells and Neural Epithelial Progenitor (NEP) cells have been well characterized and generate a diversity of cell types in vivo and in vitro. Traditionally, the acquisition of cell fate by stem cells was thought to be a process of sequential restriction in the developmental potential. However, recent studies suggest that, under the appropriate circumstances, stem cells can be reprogrammed to acquire a broader developmental potential than had originally been specified. The two experiments described in this proposal seek to test the competence of a variety of stem cells to generate sensory hair cells. First, stem cells derived from transgenic mice will be cultured under specific conditions, developed in our laboratory, that promote progenitor proliferation and hair cell differentiation (Specific Aim 1). Second, stem cells will be grafted into a developing otocyst to test the capacity of stem cells to differentiate into hair cells when exposed to the full complement of factors that regulate hair cell differentiation in vivo (Specific Aim 2). These data will indicate whether all or only a sub-set of progenitors are capable of generating cells of the inner ear. In addition, these experiments are a first step in exploring the possibility of hair cell regeneration via stem cell transplantation and differentiation. [unreadable] [unreadable]